Managing and growing a single product takes time and effort. Managing and developing a product portfolio is highly complex and, if not done correctly, can have dire implications for companies.
I thought I would share some ideas about what product teams can do to minimise the risks and take advantage of opportunities:
Review and Analyse: Regularly review and analyse the performance of each product in the portfolio. This includes analysing key metrics such as revenue, profit margins, customer satisfaction, market share, and growth potential.
Prioritise: Prioritise investment and resources towards products with high growth potential, strong profitability, and a strategic fit with the company's overall vision and goals.
Evaluate Market: Continuously evaluate market trends, and customer needs to determine which products are still relevant and which are becoming obsolete.
Roadmap Discipline: Create a clear roadmap for each product, outlining its short-term and long-term goals. Regularly update these plans based on performance and market changes.
Competition Watch: Monitor the competition and adjust the portfolio accordingly to maintain a competitive advantage.
To determine which products to keep investing in, consider the following factors:
Revenue growth potential: Identify products with the highest potential for revenue growth and prioritise investment in those products.
Profitability: Analyse the profit margins of each product and focus on those that generate the highest profit.
Strategic fit: Ensure that each product aligns with the company's overall strategy and contributes to its long-term vision.
Customer Needs: Determine which products meet customers' needs and invest in improving these products.
Products that are no longer profitable but still have a customer base may be candidates for continued sales and support. In contrast, products that are no longer relevant or have consistently low sales should be ceased immediately. Consider the following when deciding which products to cease:
Obsolete technology: If a product relies on outdated technology that can't be easily updated, it may be time to phase it out.
Poor performance: If a product consistently underperforms, it may be time to cut losses and focus on more profitable products.
Market changes: If a product is no longer meeting customers' needs due to changes in the market, it may be time to discontinue it.
The risks of not managing a product portfolio correctly include the following:
Wasted resources: Investing resources into low-performing products can lead to wasted time and money that could be better spent on more profitable products.
Missed opportunities: Failing to invest in high-growth potential products can lead to missed opportunities for growth and expansion.
Loss of competitive advantage: Ignoring market trends and failing to adapt to changing customer needs can lead to a loss of competitive advantage.
The benefits of managing a product portfolio effectively include the following:
Increased revenue: Investing in high-performing products can increase revenue and profits.
Improved efficiency: By focusing on the most profitable products, companies can become more efficient in their operations and product development.
Greater agility: By continuously monitoring the market and customer needs, companies can quickly adapt to changes and stay ahead of the competition.
Stronger competitive position: By investing in the right products and staying ahead of market trends, companies can maintain a solid competitive position and increase market share.
Final Thoughts
In summary, managing a product portfolio can be summarised in the following way:
Review: Regularly reviewing and analysing the performance of each product.
Prioritise: Prioritising investment in high-growth potential products.
Adapt: Adapting to changes in the market and customer needs.
Failure to manage the portfolio effectively can lead to wasted resources, missed opportunities, and a loss of competitive advantage. By managing your portfolio effectively, companies can increase revenue, improve efficiency, and maintain a solid competitive position.
About the Author
Adam Ryan is a Professor of Practice (Adjunct Professor) at Monash University and is a principal at Watkins Bay. Adam has over twenty years of start-up experience in Australia and the USA. An expert in Company Structuring for Innovation, Strategy, Mergers & Acquisitions, and Capital for early and growth-stage businesses.
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